Rule 306.Investments by a Fiduciary

Rule 306 sets the yardstick for how a court-supervised fiduciary is allowed to invest the money and property in its care. The standard is what a prudent person of discretion and intelligence would do when seeking reasonable income while preserving capital — not the highest possible return, and not a guarantee against loss, but a considered, careful approach. The rule does not override a will, agreement, court order, or other instrument that grants a fiduciary its own investment powers, and it leaves the court free to instruct a fiduciary on interpreting or applying whatever powers that instrument gives. The rule reaches any investment a covered fiduciary makes on or after July 1, 1973.

Rule 306(b) closes off a possible shortcut: in the cases where a fiduciary needs the court's authorization before investing, getting that authorization is not the same as the court blessing the particular investment chosen. The fiduciary still carries full responsibility for the investment decision itself, so prior court approval to invest is not a shield against later scrutiny of how that authority was used.

Rule 306(c) then bars self-dealing outright. A fiduciary cannot buy an estate asset for its own account, or for any account in which it has a personal stake, and it cannot sell an asset to itself as fiduciary when it holds a personal or financial interest in that asset. The rule leaves no room for a fiduciary to sit on both sides of a transaction involving the property it is supposed to be managing for someone else.